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Exam 5: How to Form a Business

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Question 111

True/False

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An acquisition is when one company buys the property and obligations of another company.

A) True
B) False

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Question 112

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The profits of a sole proprietorship are taxed as the personal income of the owner.

A) True
B) False

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Question 113

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According to the box, "Kickstarting a Benefit Corporation," a benefit corporation is

When two of Mercedes's friends approached her about starting a business, Mercedes's was sure she did not want to risk any amount beyond her initial investment or be involved with the day-to-day management. However, she was willing to invest in the business. Mercedes's preferences suggest that she prefers a general partnership form of business ownership.

Any debts or damages incurred by a firm organized as a sole proprietorship are

A(n) ________ is a company that has a proven business model and is willing to sell the rights to use the business model to others so that they can sell the same product or service within a given territory.

Angelica and Celeste invested all their savings in a small pizzeria they opened outside the University of Missouri. They operated the business as a general partnership. After 11 months, the business went broke and Angelica and Celeste were left with outstanding bills of $43,650, which was more than their initial investment in the company. Angelica and Celeste can

A(n) ________ is a state-chartered legal entity with authority to act and to have liability separate from its owners.

Joji is a 37-year-old married business owner. He runs a dry cleaning service with three locations in Toledo, Ohio. His personal obligations are the home that he owns with his wife, who works for a large financial consulting firm; the healthcare of his family; and his commitment toward saving for his three children's college educations. Joji knows that two of his locations require a large infusion of cash to pay for new and expensive dry cleaning equipment. Although his wife's job provides the family with health insurance, it also places the family in a higher income tax bracket. Joji would certainly like to minimize his taxes. Which of the following forms of business ownership would you suggest for him?

If firms wish to gain market share in their current market, they would consider a conglomerate merger.

An alien corporation does business abroad but is chartered in the U.S.

Janie is a general partner in a local bakery. All of her personal assets are legally protected from the debts of the business.

A conglomerate merger will

The form of business ownership that usually requires the most detailed record keeping is the

The Uniform Partnership Act is law in most states, except California, Oregon, and Colorado.

Jaheem owns a Far and Wide Travel Agency franchise. As a franchisee, Jaheem is guaranteed the right to retain all of his franchise's revenues and profits.

An attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing is called a(n)

Limited liability companies have both flexibility in tax treatment of earnings and limited liability protection for owners.

It is usually easy to start and end a sole proprietorship.

A significant disadvantage of owning a sole proprietorship is the